The private market is quietly doing a great job at keeping prescription drug prices low

In addition to distorting the real trends in spending, the political debate over drug prices tends to ignore what's working. (AP Photo/Rich Pedroncelli)

The dramatic improvement in the quality of prescription drugs over the past few decades is nothing short of a modern-day miracle. More and more Americans are successfully managing chronic illnesses — illnesses that often resulted in hospital stays and shorter life expectancy not so long ago — with medication. While it's true that this progress often comes at a high cost, the private market is actually doing a remarkably good job at keeping overall costs in check.

In March, pharmacy benefit manager CVSHealth reported that prescription drug spending for its customers increased at the slowest rate in 4 years—by only 3.2 percent—with more than one-third of their large business customers actually paying less for medicines in 2016 than they did in 2015. By comparison, overall healthcare spending is expected to rise by 6.5 percent in 2017.

In addition to distorting the real trends in spending, the political debate over drug prices tends to ignore what's working. One of those things is Medicare Part D, which offers insurance plans that defray the cost of prescription drugs for older Americans. By almost every measure this market-driven, government-subsidized benefit program has proven enormously successful: Consumers report very high levels of satisfaction, while the cost to taxpayers comes in at roughly half of its original projection. Insurers and pharmacy benefit managers (PBMs) negotiate drug prices with pharmaceutical companies, and the savings are passed onto their customers in the form of lower premiums. Seniors are free to choose the insurance plan that offers the best price and benefit combination to meet their needs.

But Medicare Part D's success has not insulated it from attack. In 2014 the Obama administration proposed rules changes that would have remade the program into the image of Obamacare—inserting the federal government into negotiations between prescription drug providers and pharmacies, limiting the number of prescription-drug plans an insurance company can offer, and putting an end to the preferred pharmacy networks that dramatically reduced costs for America's seniors.

Rep. Elijah Cummings and Senator Bernie Sanders both argue that the federal government would do a better job of negotiating drug prices than insurers and PBMs. Their plan would be a back door into single-payer, government-run healthcare for seniors. Just last month, Cummings met with President Trump at the White House to pitch his plan for a government takeover of part D negotiations, noting that Trump championed the idea as a cost-saving measure on the campaign trail. Never mind that the Congressional Budget Office has found that the government cannot save much money this way unless the government starts establishing the formularies that allow them to deny certain drugs to patients.

President Trump has since expressed reservations about this plan, calling instead for market-based reforms and deregulation. Such reforms take seriously what headline-chasing price-control proposals do not: the way the profit motive gets pharmaceutical companies to invest in the enormously expensive development of many new and specialized drugs. These proposals also value the system of private market negotiation that is successfully reducing prices.

The nomination of Dr. Scott Gottlieb, who has proposed reforms that he believes would increase competition and bring drug prices down, is an encouraging sign that the president understands there is no easy government fix to this problem — and that trying to impose one could easily do much more harm than good.

Liberal activists and their congressional allies will look for every opportunity to take greater and greater control of our healthcare system and regulate every aspect of its operation. Conservatives should see that game for what it is, and insist that sustainable cost savings will come from greater private sector competition and the substantial benefits that accrue from robust private negotiation.

April Ponnuru (@AprilPonnuru) is a contributor to the Washington Examiner's Beltway Confidential blog. She is a senior adviser at the Conservative Reform Network. Previously she was an adviser to Jeb Bush's presidential campaign.